Sandra MacGregor
Beth Buczynski
Secured credit cards are a tool that can help you establish, build or improve credit history, but they are not all created equally.
If you’re looking for a secured credit card, keep in mind its main purpose is to help you build credit. Knowing this can help you compare and prioritize a card’s key features, such as credit bureau reporting, low fees and an affordable security deposit.
Secured Neo Mastercard
Secured Neo Mastercard helps you earn cash back up to 4% on gas and groceries along 1% on all other purchases. Get started with as little as $50. Guaranteed approval with no credit score needed to apply. Build you credit score with on-time payments. Terms and Conditions apply.
1. Verify reporting to Equifax or TransUnion
Whether your goal is to establish and build a credit history or strengthen your credit score, be sure that any secured credit card under consideration will report your payments to at least one of Canada’s main credit bureaus — Equifax and TransUnion. If your payments aren’t reported, the card won’t have any impact on your credit.
It’s not always possible to verify whether a card issuer reports payments to a credit bureau just by checking its website. If you’re uncertain, ask the provider before applying for a secured card.
One example of a secured card that reports is the Home Trust Secured Visa Card.
Home Trust Secured Visa Card
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Annual Fee$59$0 annual fee with a 19.99% interest rate option also available.
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Interest Rates14.99% / 19.80%14.99% on purchases, 19.80% on cash advances
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Minimum Deposit$500
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Maximum Deposit$10,000
The Home Trust Secured Visa offers a straightforward, no-frills experience for credit builders. Plus, there are two secured credit card options to fit a variety of needs: a no-fee card, and a low-interest card with a $59 annual fee.
Pros
- Low interest rate.
- Payments are reported to both credit bureaus.
Cons
- You’ll need to budget for the annual fee.
- No ability to earn rewards on purchases.
- $59 annual fee.
- No fee option available with a higher interest rate.
- $500 minimum security fund deposit required.
- $10,000 maximum security fund deposit.
- Hard credit checks are made on Home Trust Secured Visa applications.
- Credit activity, including every payment, is reported to TransUnion and Equifax, the two major consumer credit bureaus in Canada.
- Ability to upgrade to an unsecured credit card.
- Manage your account and billing with online banking.
- Cardholders can choose between a card with no annual fee and 19.99% interest or an annual fee of $59 and 14.90% interest.
- Protection against fraud through Visa’s Zero Liability Policy.
- Preferred rates: 14.90% for purchases, 19.80% for cash advances.
- To be eligible, you must have a source of income and cannot currently be in bankruptcy. You must be able to provide security funds and be a Canadian resident of the age of majority in the province or territory where you live. The Home Trust Secured Visa Card is not available to Québec residents.
2. Find a minimum deposit you can afford
Secured credit cards require a security deposit to open an account, which is typically equal to your credit limit. The minimum required security deposit is another important factor to consider when deciding which secured card is best for you.
In many cases, you can’t get approved for the card until you transfer the full amount of your security deposit to the issuer, which can be hundreds of dollars in some cases. If your cash flow is limited, a card with a lower deposit requirement might be best for your budget.
Some examples of low-deposit secured credit cards include:
Secured Neo Mastercard
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Annual Fee$60$5 / Month
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Interest Rates19.99%-29.99% / 22.99%-31.99%19.99%-29.99% on purchases, 22.99%-31.99% on cash advances.
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Minimum Deposit$50
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Maximum Deposit$10,000
Pros
- A small $50 minimum deposit makes this card accessible to consumers of all budgets.
- Cashback rate of up to 4%.
Cons
- Interest rates could be as high as 29.99% for some users.
- Build credit history with on-time payments.
- Set your credit limit and get started with as little as $50.
- Guaranteed approval with no credit score needed to apply.
- 0.5% guaranteed monthly minimum cashback.
- Only $5 / Month
- Depending on your Required Everyday account balance, customers can earn cashback up to 4% on gas, 4% on groceries, and 1% on all other purchases (up to a yearly spend cap).
- Personalized Insights AI generates tailored information and recommendations designed specifically for you.
Capital One Guaranteed Secured Mastercard
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Annual Fee$59
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Interest Rates21.90% / 21.90%21.90% for purchases and balance transfers, 21.90% for cash advances
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Minimum Deposit$75
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Maximum Deposit$2,500
The Capital One Guaranteed Secured Mastercard is one of the few secured credit cards that comes with a suite of insurance benefits and premium perks.
Pros
- Price protection, extended warranty, travel benefits and several types of insurance, including up to $250,000 in Common Carrier Travel Accident Insurance are included.
- A low $75 minimum deposit is affordable for most consumers.
Cons
- No ability to earn rewards on purchases.
- Your credit limit can’t surpass the $2,500 maximum security funds deposit, which is lower than what other secured credit cards typically offer.
- $59 annual fee.
- $75 or $300 minimum security fund deposit is required.
- $2,500 maximum security fund deposit.
- Hard credit checks are made on Capital One Guaranteed Secured Mastercard applications.
- Credit activity, including every payment, is reported to TransUnion and Equifax, the two major consumer credit bureaus in Canada.
- Ability to upgrade to an unsecured credit card.
- Guaranteed approval, as long as you meet eligibility requirements.
- Includes Capital One Price Protection Service, Purchase Assurance, and Extended Warranty coverage that automatically doubles the original manufacturer’s warranty for up to two years on most items.
- Cardholders benefit from Mastercard Global Service, which includes emergency cash advances, and Zero Liability for unauthorized use of the card.
- Access to travel benefits: Common Carrier Travel Accident Insurance (up to $250,000), a Car Rental Collision/Loss Damage Waiver, baggage delay, and travel assistance.
- Preferred rates: 21.90% for purchases and balance transfers, 21.90% for cash advances.
- To be eligible, you must be able to provide security funds and be the age of majority in the province or territory where you live. In addition, you don’t have an existing Capital One account or a pending application for one, haven’t applied for a Capital One account more than once in the last 30 days or had a Capital One account that was not in good standing in the last year.
3. Compare fees
Generally, it’s a good idea to avoid annual fees and other fees on credit cards, if possible. Some credit card providers are clear about their fees, but other may require you to sift through the fine print. Be on the lookout for:
- Inactivity fees.
- Higher-than-normal foreign transaction fees.
- Monthly fees on top of an annual fee.
If you have bad credit and find it tough to get approved for a secured card, it may be worth paying an annual fee in exchange for a more flexible approval process. Alternatively, you can also seek out a prepaid card that has the ability to help you build credit while avoiding debt. They’re rare, but they do exist.
4. Seek providers offering both secured and unsecured cards
Some providers that offer a variety of credit cards may automatically offer to upgrade cardholders to unsecured cards — otherwise known as traditional credit cards — after a certain period of responsible usage. That includes on-time and regular payments, which can improve your credit score.
The best way to ensure a chance of getting upgraded is to choose a credit card company that has both secured and unsecured credit cards. That may make the process of being upgraded from a secured to an unsecured card with the same issuer can be fairly seamless when the time comes.
If you opt for a provider that specializes only in unsecured cards , you’ll have to switch card issuers when you’re ready to upgrade. However, switching providers is manageable, and shopping around can help you find the best card for your needs.
Which makes sense for you? Secured vs. Unsecured Credit Cards: How to Choose
Best Secured Credit Cards in Canada
Compare all different secured credit cards side-by-side and find out the best card that will meet your need with special perks and benefits
5. Be aware of approval timeline
Secured cards generally don’t offer instant approval because you need to provide a security deposit to be officially approved for a card. That said, some card providers all but guarantee approval as long as you meet the basic requirements (like being the age of majority and a resident of Canada) and provide a deposit.
6. Compare perks, rewards and other benefits
It’s nice to get cash back or rewards when using a credit card, but the primary purpose of a secured card is to build credit, so rewards and benefits should be of secondary concern. Still, some secured credit card providers offer cash back rewards or other perks that can enhance the experience of being a cardholder.
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